Macro environment

Macro Environment in Business

1. Macro – Environment M.Vadivel

2. Macro Environment Meaning Macro environment has major external and uncontrollable factors that influence an organization’s decision making and affect its performance and strategies. When the macro environment is uncontrollable, the success of a company depends on its adaptability to the environment.

3. External Environment A). Micro Environment B). Macro Environment Micro Environment * Suppliers * Customers * Market Intermediaries * Competitors * Public

4. Macro Environment * Economic * Political * Social and Cultural * Technological * Legal * Natural * Financial * Global

5. Economic Environment Business enterprises conduct its activities in the market system with the objective of profit maximization, since business enterprise is essentially an economic institution. Therefore, surrounded by an economic environment which consists of economic factors that influence the business in a country. These factors include GDP, corporate profits, inflation rate, employment, balance of payment and interest rates etc.,

6. Political Environment The economic and political systems of a country are mutually dependent, the one reflecting the ideologies of the other. It comprises political stability and the policies of the government. Ideological inclination of political parties, personal interest of politicians, influence of party formus etc., create the political environment.

7. Social and Cultural Environment Socio-cultural environment means the value of attitudes, beliefs and customs of people in a given group or society. Socio-cultural dimensions complicate the environment in which entrepreneurs have to manage their ventures, which literacy rate, customs, value, lifestyle and mobility of population are part of the social environment.

8. Technological Environment The progress of business depends on the level of technology available in a country which gives a massive impetus to the economic revival. It also indicates the pace of research and development and progress made in introducing modern technology in production. Technology provides capital intensive, but cost effective alternative to traditional labour intensive methods. In a competitive business envirnment technology is the key to development.

9. Legal Environment It has a great impact on the functioning of the organization as it establishes codes and procedures for various types and aspects of business and deals with deviations or infringement law.

10. Natural Environment No business can survive in climatically inhospitable conditions. Business has broadlly two relationships with natural environment. First, the environment is the source of resource as raw materials and 2 nd , it has causes damage in the process of production.

11. Financial Environment Business finance is concerned with making decisions about the investments in the business. It includes bond markets, forex markets, stock market, commodity markets and cash or spot markets. All these markets play an important role in raising finances for the companies and at the same time give profits to the investors.

12. Global Environment It includes rules and regulations of WTO, IMF, WB, SAARC, G20 and other international bodies which duly effect the business organisation operating their business in any particular country. Business has to exist in world market and then it should understand their effect and take action according to these rules and regulations.